Saab - Northern Europes leading high-technology company

Press release

08 March 2000

Two of Swedens most knowledge intensive companies - Saab and Celsius aremerging to create Northern Europes leading high-technology company.

"With the acquisition of Celsius, Saab is further strengthening itsposition as a growth oriented and innovative knowledge company, with theambition and ability to be the natural choice of customers. We willcontinue to be a leading supplier in our home markets. Independently, ortogether with partners, we will focus on international growth marketswithin our areas of expertise. In addition, we have the ability to takeour advanced technology to the civilian markets, where it is in demand",said Bengt Halse when he presented the company on Wednesday.

Together, these two companies have broad and in-depth knowledge thatcomprises everything from aviation technology, aerodynamics, spacetechnology and underwater technology, to areas such as informationgathering, command and control, precision engagement, sensors, imageprocessing and communication technology. Today, a substantial portion ofSwedens most advanced skills within electronics and information technologycan be found within Saab.

There is a strong logic to the merger. It shows that Saab is taking anactive part in the restructuring of the Swedish defense industry, whichwill save money for the companies customers and shareholders. Annual costsaving synergies are expected to total SEK 400 million and one-time costsfor the merger amount to SEK 600 million.

"But this merger is especially important as the company strengthens itsposition in the areas that we are seeing the defense market and defenseorganizations develop, especially in Sweden. The English term Revolutionin Military Affairs (RMA) is used to describe the technological andstrategic changes that defense organizations are going through. RMA meansthat the combined development within three areas information gathering,decision-making support and precision engagement are changing, in acomprehensive way, a defense organization "possibilities to operate",continued Halse.Therefore, the Swedish National Defense, like a large number of defenseorganizations in other countries, is planning to modernize, usingperspectives that are based on the RMA concept. The ability to usefirepower is being complemented with increasingly important systems forinformation and command and control. The defense against invasion is beingtransformed into a defense of information.

Saab is strong within all three areas of this perspective and also has theability to carry out systems integration. Today, Gripen is an example of acombined information-, command and control, and engagement system, withthe capacity to play a broad and varying role in the total defense.

The skills of Saab and Celsius complement each other in a way that puts usin a very good position to face these developments within the defensemarkets growth segments.

From an international perspective, the BAE SYSTEMS partnership and partialownership is of great importance. The Saab that is evolving will gain evengreater utilization of this link to the rest of Europe and to otherinternational markets. This will also result in noticeable marketingsynergies.

Saab shall continue to grow within its core areas organically in thosemarkets where we are focused, but also through acquiring skills andoperations that complement and strengthen our focus and core operations.

Celsius Aviation ServicesAgainst the background of Saabs focus, and in order to provide CelsiusAviation Services the best possibilities to develop to its full potential,we are seeking to broaden the ownership of the company. The intention is

to seek out new majority shareholders in Celsius Aviation Services, with along-term interest and focus on the aviation market.

Bofors Weapon SystemsBofors Weapon Systems has operations focusing on artillery pieces andammunition as well as fire control, that is, the entire competence chainfrom target data to neutralizing the target. The intention is to seek outnew majority shareholders in Bofors Weapon Systems with a long-terminterest and focus on the current market.

InfomaticsThe business area, Infomatics, comprises Saabs operations within commandand control, and information systems. The business area also develops,manufactures and sells advanced systems for electronic warfare, avionics,sensors, simulation and training as well as signature management. Inaddition, this business area is also active within civilian growth niches.The business area has a strong position in important markets today andgood conditions to play a central role in the development of informationdefense both in Sweden and internationally. In addition, the business areahas good possibilities to reach the civilian markets with its technology.

Business area manager is the former President of Celsius, Lars Josefsson,who is also a senior vice-president in Saab.

AerospaceAerospace has the comprehensive systems integration competence that isrequired in order to construct entire aerospace and defense systems, andto, in cooperation with others, develop total and partial solutions forthe fighter aircraft of the future.

Today, Gripen is the business areas most important product. By being theonly fourth-generation fighter aircraft in operative service, Gripenoffers a unique defense system and the export potential is very good. Froma longer perspective, Aerospace is well advanced in the development oftomorrows aerospace technology and is working with the solutions, whichwithin 20-30 years, are expected to begin replacing the technology thatGripen represents. Aerospace also develops and produces subassemblies forcommercial aircraft in cooperation with the Airbus-company and others.

Business area manager is Åke Svensson, former manager of the businessunit, Future Products and Technology.

DynamicsThe business area Dynamics develops missile systems, mobile anti-tankweapons and underwater systems for use in the air, on land and at sea.Through the merger of Saab and Celsius, the business area can offer acomplete range within its core areas. The business area has also been aconsistent presence in many export markets.

The Swedish National Defenses long-term supply strategy provides a basefor Dynamics operation. Swedish participation in international cooperativeprograms is an important part of this base. Dynamics foremost growthpotential lies in the development and success of international programsand in continued export of the systems in focused product and marketsegments

Business area manager is Ingemar Anderson, former manager of the businessarea, Defense, within Celsius.Technical Support and ServicesThe business area, Technical Support and Services, focuses on the growingmilitary and civilian markets for high-technological services withinaviation, command and control, information, communication and sensors. Thebusiness area is dominated by AerotechTelub, which was formed at thebeginning of the year through the merger of Celsius Aerotech and parts ofTietoEnator. Saab owns 57% of AerotechTelub and TietoEnator owns 43%. Inaddition to AerotechTelub, the business area also includes Saab Nyge Aeroand parts of the after-market operations within Saab.

SpaceTogether, Saab and Ericsson run Saab Ericsson Space (60/40), whichdevelops and manufactures different types of space equipment. Space is aleading and independent manufacturer of computer systems, microwaveelectronics and antennas as well as separation systems, and markets thebusiness areas products throughout the entire accessible internationalmarket. The business area has shown good growth and profitability forseveral years and sees the greatest growth potential in the commercialtelecommunications market.

Business area manager is Bengt Mörtberg, former manager of MechanicalProductsat Saab Ericsson Space

Aviation ServicesAviation Services carries out commercial flight maintenance primarily inthe US. The operation offers a wide selection of services in themaintenance market and also within asset management services such asleasing, and within the sales of aircraft engines, components andaircraft.

The area is working towards a growing market with a consolidatedindustrial structure.Celsius Aviation Services has shown very strong growth with profitabilityin recent years. Future growth possibilities are assessed as good.

Business area manager is Christer Persson, also a former manager forCelsius Aviation Services.

Other OperationsOther Operations contains the wholly owned subsidiaries, Saab AircraftLeasing, Saab Aircraft AB and Bofors Weapon Systems, which are active inboth artillery pieces and ammunition as well as fire control and forms thecomplete competence chain from target data to neutralization of thetarget.

Operations are also managed in a number of additional companies that areoutside Saabs primary focus. In the coming years, Saab will be reducingits commitments in the majority of these companies that are outside thecore operations. Efforts to find a good owner both for the employees andfor Saab is a continuous job. The different operations nature and focusdetermine the rate of the structuring work.

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